North Americas galvanizing industry, which was
hammered by the Great Recession of 2008-09, is showing signs of
recovery, with new lines coming on stream and production
estimated to reach 14 million to 15 million tons this year.
Thats still well below the 18 million tons reported in
the pre-recession year of 2006, but well above the 9 million
tons produced in 2009 at the bottom of the recession.
It is definitely starting to pick up, said Gary
Dallin, director of the GalvInfo Center in North
Carolinas Research Triangle Park near Durham. The center,
operated by the International Zinc Association, is sponsored by
major producers and service centers.
Dallin said there are a number of new lines under
construction. That whole process started about four or five
years ago, but much of that new activity went into hiatus
because of the recession.
Galvanized sheets biggest North American market is the
automotive sector, which accounts for about 40 percent of
consumption. Automotive fell right off the table in
2008, Dallin said, which explains much of the galvanized
sheet industrys weakness during the recession. But with
North American vehicle sales recovering strongly in 2010 and
2011, galvanized producers have reason for optimism. North
American vehicle sales reached an annualized rate of 14 million
units in the first quarter of 2012, up from 13 million in the
same period last year. We would expect that the shape of
the automotive vehicle sales curve will be pretty similar to
the galvanized production figures, Dallin said.
Construction and steel service centers account for the next
two largest chunks of galvanized sheet production, while
appliances and the electric industryboth at less than 5
percentaccount for the rest of the industrys annual
output. The use of galvanized sheet has dropped off sharply in
residential construction since the recession and has yet to
recover, although Dallin said that galvanized use in commercial
construction is coming back at a stronger pace.
Although there are still a lot of idled lines, new
galvanized capacity is coming on, Dallin said. Much of
that new North American capacity is being brought on line by
OAO Severstal, ThyssenKrupp AG and Galvstar LLC.
Severstal North America Inc., a subsidiary of Russian
steelmaker OAO Severstal, is in the midst of a $1.1-billion
expansion that will make it one of the leading steel producers
in the world, capable of meeting the most demanding
applications for 21st-Century automotive and original equipment
manufacturing (OEM) customers. In August, Severstal launched
its new 72-inch coupled pickle line tandem cold mill at its
Dearborn, Mich., mill. Now ramping up to full capacity of 2.1
million tons per year, the line is being complemented by a
$285-million hot-dip galvanizing line in the same Michigan mill
The new equipment will enable us to offer products of
superior quality and provide exceptional service to our
customers, said Sergei Kuznetsov, chief executive officer
of Severstal NA, as well as produce the next generation
of advanced high-strength steels for automotive
Severstal began cold commissioning of the Dearborn hot-dip
galvanizing line in October and launched full production of
galvanized products in January. Kuznetsov told employees that
the long-awaited launch of this new state-of-the-art
facility strengthens our presence in the automotive industry
with highly demanded galvanized and galvannealed products for
internal and external automobile parts.
The hot-dip galvanizing line, capable of producing 500,000
tons of hot-dip galvanized and galvannealed steel annually,
includes the most modern controls for coating thickness and
surface texture, as well as alloy and phase control, the
While the new lines were coming into commercial production
at Dearborn, Severstal also was completing the launch of its
second hot-dip galvanizing line at the companys mill in
Columbus, Miss., with a designed annual capacity of 600,000
tons of hot-rolled and cold-rolled galvanized products and
capable of galvanizing steel up to 72 inches wide. The new line
will target applications for the construction, infrastructure
and culvert markets.
The start-up of the second line at Columbus complements the
recent launch of the mills second electric-arc furnace
primary strand and the push-pull pickle line. The Phase 2
expansion project at the Columbus mill increases annual steel
capacity to 3.4 million tons and annual galvanizing capacity to
1.1 million tons.
Across the state line from Severstals Mississippi
facility, ThyssenKrupp Steel USA began producing its first
coated prime coil on hot-dip galvanizing line No. 1 at its
greenfield mill in Calvert, Ala., in March last year. Three
other galvanizing lines had been planned but were delayed when
costs exceeded expectations.
When complete, the four galvanizing lines at the Calvert
mill will have the capacity to produce 1.8 million tons of
coated products for a number of applications, including
construction. The company intends to offer a comprehensive list
of products at the Calvert mill, making hot-rolled band,
pickled coil and fully finished cold-rolled products, as well
as galvanized, galvannealed, aluminized and Galvalume
The Calvert mill uses high-quality carbon steel slab
produced at the companys recently completed greenfield
mill in Brazil. The slabs are processed through the Calvert
mills hot-strip mill, cold-rolling mill and hot-dip
Meanwhile, Galvstar spent 2011 bringing a new galvanizing
line into commercial production at the former American Axle
& Manufacturing plant in Buffalo, N.Y. Galvstar is
producing about 250,000 tons per year of Galfan, which is 95
percent zinc and almost 5 percent aluminum coated steel
utilizing the hot-dip galvanized process. The company said it
is targeting the market for construction products.
One line expected to start up in 2013 is a 400,000-tonne
galvanizing facility being built near Monterrey, Mexico, by a
joint venture of Mexico-based Ternium SA and Japans
Nippon Steel Corp. The new facility will produce high-grade
galvanized automotive steel for the Mexican light vehicle
industry, which is expected to increase production to 3 million
vehicles annually in 2015 from 2.3 million in 2010.
Hamilton, Ontario-based ArcelorMittal Dofasco Inc. announced
in November it was delaying the schedule for converting an
existing galvanizing line at its Hamilton Works and installing
a new galvanizing line and temper mill.
Another recent development is RG Steel LLCs
announcement in early March that it intends to start up the No.
2 galvanizing line at the companys Sparrows Point, Md.,
mill complex. Idled in 2010before RG Steel bought the
facility from Severstal NAthe No. 2 galvanizing line will
give the mill an additional 180,000 tons of galvanized capacity
and allow the mill to dedicate its No. 4 line to Galvalume
With substantial amounts of new capacity coming on line,
some in the industry worry about an oversupply of galvanized
product. Residential construction remains depressed, and
commercial construction is still a long way from the level of
activity it achieved in 2006.
Dallin said the capacity situation might not be as stark as
it first appears. There is new capacity coming on,
he said, but there are still a lot of idled lines out
there. And some of those lines are just inoperable.
RG Steels plans to restart its idle No. 2 galvanizing
line at Sparrows Point is just a drop in the bucket compared
with the number of lines that are idled and inoperable in North
America. The GalvInfo Center recently reported that there are a
total of 75 hot-dip lines operating in North America, while 17
lines are idle and six are completely inoperable. The idled
lines in North America account for about 4 million tons of
Galvanized sheet producers are keenly aware of two factors
that have the capability of throwing a monkey wrench into
domestic production forecasts: zinc prices and imports.
Galvanizers account for about 50 percent of zinc consumption
in North America, and any increase in the price of zinc plays
straight to the bottom line for galvanizers. Since the
mid-1990s, zinc prices have been on the same roller-coaster
ride as other metallic commodities.
Zinc is the single-largest commodity cost for
galvanizers, Dallin said. Until 2000, the price of
zinc was typically somewhere between 50 and 60 cents per pound.
That was the price for years. Once other commodities,
such as copper, began their 21st-Century surge, zinc went along
for the ride. Zinc got as high as $2 a pound just before
the bottom fell out of the U.S. economy, and in recent years it
has stabilized at about half that. Right now, zinc is slightly
north of $1 a pound.
Because of the volatility in pricing, producers are looking
at ways of using less zinc in their galvanizing applications.
But they also worry about competition from overseas. As the
Chinese steel industry has expanded, so has Chinas
galvanizing sector. GalvInfo said that China has expanded its
galvanizing lines sixfold in the past 20 years to 300 lines
from 50, although Dallin noted that not all of them are
Dallin also noted that India has experienced a major
expansion of its galvanizing capacity in recent years.
The two big exporters that everybody over here watches
are China and India, he said.
The American Galvanizers Association, which represents
general galvanizers who galvanize steel after it is fabricated,
also is seeing signs of a business turnaround. The
associations 130 members provide galvanized steel for
industrial applications, such as steel utility poles, and
member companies each generate from $5 million to $50 million
in revenue per year, according to executive director Philip
Rahrig. We are pretty optimistic about 2012, he